Executive Summary

Medical liability for staff employed by the National Health Service (NHS) in England is addressed through the tort principle of vicarious liability. Where claims for negligence of employees of the NHS arise a program known as the Clinical Negligence Scheme for Trusts addresses these issues. The program is funded through contributions by NHS Trusts that are members and operates on a “pay-as-you-go” basis, funding claims out of the monies it raises. The NHS Litigation Authority administers this program.

Introduction

This report addresses how the National Health Service (NHS) in England and Wales manages clinical negligence issues. The NHS was founded in 1948 with the aim of providing free health care at the point of use.

NHS Indemnity

The focus of medical liability in England and Wales is under the law of tort, specifically negligence.[1] It is general practice in cases of clinical negligence that National Health Service Trusts and Health Authorities are the bodies that are sued, rather than individual clinicians.[2] Under this practice, NHS Trusts and Health Authorities are vicariously liable for the negligent acts and omissions of their employees – including doctors, nurses, and clinicians. This liability arises from the duty of care that the NHS Trusts owe to their patients.[3] This application of vicarious liability has resulted in a government policy[4] known as NHS indemnification, which arises when an employee of the NHS[5] in the course of their work, is responsible for a negligent act or omission (commonly referred to as “clinical negligence”)[6] that results in harm to an NHS patient or volunteer.[7]

The NHS has provided guidance stating that when it is vicariously liable for the negligent healthcare professional it should “accept full financial liability where negligent harm has occurred, and not seek to recover costs from the healthcare professional involved.”[8] When negligence is alleged, the NHS is responsible for meeting the “legal and administrative costs of defending the claim or, if appropriate, of reaching a settlement; the plaintiff’s costs, as agreed by the two parties or as awarded by the court; [and] the damages awarded either as a one-off payment or as a structured settlement.”[9]

NHS indemnity covers only the financial consequences of a clinical negligence program, not complaints, or disciplinary or regulatory hearings,[10] and does not extend to General Practitioners (primary care physicians), “general dental practitioners, pharmacists or optometrists; other self-employed health care professionals (e.g., independent midwives); employees of private hospitals; local education authorities; or voluntary agencies.”[11] General Practitioners typically belong to a medical defense society or union (discussed briefly below) that will provide advice and may undertake the defense and settlement of the case.[12]

Clinical Negligence Program for Trusts

With the current operation of NHS indemnity, NHS Trusts, rather than the Department of Health, are expected to meet the costs of damages awarded against them. Given that damages awarded could reach millions of pounds, which would negatively affect the budget of these Trusts in providing healthcare to the population, a number of programs (known as “schemes” in England) were established to address claims for medical negligence.[13] The current program is the Clinical Negligence Scheme for Trusts, which was established to deal with claims made after April 1, 1995.[14] Claims prior to this date are addressed by the Existing Liabilities Scheme, which is centrally funded by the Department of Health.[15] These programs were created to streamline the management of claims and thus reduce legal costs.[16] The Clinical Negligence Scheme for Trusts is a voluntary risk pooling program,[17] and Trusts can opt into it and “pay a determined premium in order to achieve financial cover, as an insurance scheme.”[18] Discounts of up to 30 percent of the premium are available for NHS Trusts that take appropriate risk management steps.[19] The Department of Health recommends that NHS Trusts join this program,[20] and currently “all NHS trusts, Foundation trusts and Primary Care Trusts (PCTs) in England … belong to the scheme.”[21]

NHS Litigation Authority

The Clinical Negligence Scheme for Trusts is administered by the NHS Litigation Authority, which was established amid concern of the rising cost of clinical negligence claims.[22] The Litigation Authority is a Special Health Authority, meaning that it is part of the NHS. It manages the legal side of claims through panel solicitors and is responsible for the payment of any damages or legal costs.[23]

The costs of any award of damages against the NHS are provided for out of each Trusts’ budget, loans, or through the Clinical Negligence Scheme for Trusts. The Clinical Negligence Scheme for Trusts provides for the costs of meeting damages awarded under the program “through members contributions on a ‘pay as you go’ basis”[24] to minimize “the impact on cash available for patient care in any given financial period.”[25]

The NHS Litigation Authority is required to operate within a budget set by the government (known as the Revenue Resource Limit) of £2,642.36 million (approximately US$3,700.00 million) for financial year 2007-08. During this period, the Litigation Authority had a surplus of £3.13 million (approximately US$4.3 million). Additionally, at the end of 2007-08 the Litigation Authority had a cash balance of £124.9 million (approximately US$175 million). This cash is from contributions collected for the Clinical Negligence Scheme for Trusts that were not used for the 2007-08 period. The way that the Litigation Authority manages this program means that it is required to “take into account possible variations to planned expenditure for example where a case is concluded earlier than originally forecast by collecting sufficient contributions to cover eventualities which have an adverse impact on cash flow.”[26] As a result of the cash balance, the Authority has reduced contributions to the program for 2008-09 “by making rebates to members and thus plans to collect some £70m [approximately US$100 million] less than originally anticipated in the 2008/09 financial year.”[27]

Part of the mandate of the NHS Litigation Authority is to avoid litigation, where possible. Its Framework Document notes that it aims to “maximise the resources available for patient care, by defending unjustified actions robustly [and] settling justified actions efficiently.”[28] Furthermore, the Litigation Authority notes that it “encourage[s] NHS bodies to offer patients explanations and apologies.[29] We seek to avoid formal litigation as far as possible and our historical data show that only about 4% of our cases go to court, including settlements made on behalf of minors, which must be approved by a court.”[30]

The mandate of the NHS Litigation Authority further requires it “to minimise the risk that patient care in a particular community is jeopardised by a large settlement against a local NHS body.”[31] It thus aims to “to spread the costs of settlements more evenly over time”[32] through the use of periodical payments made to the claimant throughout their life, as it considers that this is the fairest method of settling the costs of personal injury claims when costs are significant.[33]

Operation of the System

In 2007-08 the NHS Litigation Authority received 5,470 claims of clinical negligence against NHS bodies[34] and closed 6,679 claims.[35] During the same period, damages awarded to patients in connection with clinical negligence claims and legal costs paid by the NHS Litigation Authority amounted to £633.3 million (approximately US$886 million).[36] The average time it took the NHS Litigation Authority to deal with a claim, either to the point of conclusion or discontinuation, was 1.46 years.[37] The policy of the NHS Litigation Authority in seeking to avoid litigation is demonstrated in the statistics of the cases that it has processed. It reports that 96 percent of cases it handled were settled “out of court through a variety of methods of ‘alternative dispute resolution’ ”[38] and that over the past ten years, from all clinical claims it handled, 41 percent were abandoned by the claimant; 41 percent settled out of court; 4 percent settled in court, with these being mainly court approvals of negotiated settlements; and 14 percent remain outstanding.[39] It notes that fewer than fifty clinical negligence cases a year are contested in court.[40]

Indemnity Through Medical Defense Organizations

As noted above, certain clinicians that are not considered to be employed by the NHS are not indemnified by the NHS. These individuals typically obtain indemnity through a medical defense organization, such as the Medical Defence Union or the Medical Protection Society, or, in certain instances, insurance obtained on the open market.[41] The indemnity provided by some of the medical defense organizations is “discretionary indemnity,” meaning that the individual has only the right to request assistance and that the organization makes the decision whether to indemnify the medical practitioner, a decision that can only be made when it is presented with the facts of the case.

NHS Redress

The government has legislated for a new program to come into operation to redress instances of clinical negligence.[42] The technicalities of this program have yet to be determined, but it initially appears that it will be limited to claims of under £20,000 (approximately US$28,000). The legislation granting the Secretary of State for Health the authority to establish this program requires that it must, in addition to providing for offers of compensation, include provisions that necessitate the giving of an explanation, an apology, and a report “on the action which has been, or will be, taken to prevent similar cases arising.”[43] The aim of introducing this additional program is not only to reduce litigation costs, but also to address concerns that the older program is:

Complex and slow;

Costly both in terms of legal fees and diverting clinical staff from clinical care;

Negatively affecting NHS staff morale and public confidence;

Dissatisfying patients with the lack of explanations and apologies or reassurance that action has been taken to prevent the same incident happening to another patient; and

Encourages defensiveness and secrecy in the NHS, which stands in the way of learning and improvement in the health service.[44]

Regulations implementing the program have yet to be issued; thus, as of May 2009 it is not in force.

Tort is “a well established cause of action and … plays a major part in the arena of healthcare laws. This is mainly due to the fact that as a general principle, there is no contractual relationship between doctor and patient except where the patient seeks treatment privately.” PETER DE CRUZ, COMPARATIVE HEALTHCARE LAW 234 (2001), referring to Pfizer Corp. v. Ministry of Health [1965] AC 512 (HL). There are numerous legal issues that arise during a tort claim, and these are not addressed in this report. Rather, it focuses on the systems that administer medical liability claims. [Back to Text]

“Clinical negligence” is defined as “a breach of duty of care by members of the health care professions employed by NHS bodies or by others consequent on decisions or judgments made by members of those professions acting in their professional capacity in the course of their employment, and which are admitted as negligent by the employer or are determined as such through the legal process.” Id. [Back to Text]

The basis for the creation of these programs is the National Health Service and Community Care Act 1990, c. 19 § 21.
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There are a number of other programs that continue in operation to provide coverage for clinical negligence claims prior to this date. As the Clinical Negligence Scheme for Trusts is currently the main program in operation, this report will focus on its operation. It was originally established by the National Health Service Act 1977, c. 49, as amended, and the NHS (Clinical Negligence Scheme) Regulations 1996, SI 1996/251, as amended. The National Health Service Act 1977, c. 49 was repealed by the National Health Service (Consequential Provisions) Act, 2006 c. 43; however, the regulations continue in force. [Back to Text]

A circular issued by the NHS Litigation Authority notes that “We encourage [the use of apologies], and stress that apologies do not constitute an admission of liability. In addition, it is not our policy to dispute any payment, under any scheme, solely on the grounds of such an apology.... [T]he NHSLA is keen to encourage both clinicians and NHS bodies to supply appropriate information whether informally, formally or through mediation.... We consider that the provision of such information constitutes good clinical and managerial practice.... This … is intended to encourage scheme members and their employees to offer the earlier, more informal, apologies and explanations so desired by patients and their families.” NHS Litigation Authority, Apologies and Explanations (May 1, 2009), http://www.nhsla.com/NR/rdonlyres/00F14BA6-0621-4A23-B885-FA18326FF745/0/ApologiesandExplanationsMay1st2009.pdf (external link). [Back to Text]